A Posco lithium extraction facility is under construction at the Hombre Muerto salt lake in Argentina. (Posco)

Posco Holdings said Tuesday it is pushing for a project in the United States to extract lithium, a key battery material, from lithium clay deposits.

Posco Holdings recently signed a memorandum of understanding with Jindalee Resources to have the Australia-based mineral exploration company provide Posco with lithium clay, while Posco jointly develops lithium extraction process technology with Pohang Institute Industrial Science.

Jindalee Resources currently owns a 100 percent stake in the McDermitt clay lithium Project, a project designed to extract lithium from the McDermitt caldera.

The McDermitt caldera, which is situated on the border of Oregon and Nevada, is one of the world's largest lithium clay reserves.

Under the agreement, Jindalee Resources will drill for lithium clay in the McDermitt caldera to provide Posco composite samples for extraction technology testing at Posco's Korean research facilities.

Currently, lithium is mainly extracted from ore and brine. There is no precedent of extracting lithium from lithium clay deposits or oil-field brine for commercial production as of yet.

However, with large-scale lithium clay deposits being discovered in diverse regions of North America, Posco said production of lithium from previously unexplored fields is expected to increase dramatically with Posco's newly improved technology and the company's in-depth exploration.

After confirming the commercialization feasibility of the lithium clay extraction process in the McDermitt caldera, the two companies say they will plan to discuss making concrete business plans, including making joint investments in the McDermitt project.

"If the McDermitt clay lithium project leads to local investment, the project is expected to receive benefits from US' Inflation Reduction Act and help (Posco) gain the upper hand (compared to its competitors) in the lithium business," an official from Posco said in a press release.

The recent memorandum for understanding for lithium extraction at overseas sites follows Posco's efforts to unearth new lithium sources.

Posco struck figurative gold in 2020 in Argentina when its Hombre Muerto salt lake in northern Argentina was found to have contained an estimated 13.5 million metric tons of lithium reserves, more than six times greater than its initial calculation of 2.2 million tons.

"With our world-class lithium extraction technology, we are reviewing research and development procedures and investment plans for next-generation lithium resources such as oil-field brine and geothermal brine, in addition to lithium clay reserve sites in North America," said a Posco official.